Stay away from credit cards if...

[SatyG]

> If you don't have health insurance for yourself and your dependents
> if you don't have enough liquid emergency fund
> if you don't have a habit of planning for your finances every month

Here is a recent story of one of my close friends. This friend of mine, employed at a reputed retail brand (H&M India), had a harsh lesson in financial planning shortly after landing his first job. Excited to build his credit, he quickly got into the credit card game and responsibly paid off his dues for the first few months.

However, things took a turn when he faced an unexpected major expense. Confident in his ability to repay, he used his credit card. But soon after, his father fell critically ill. Since his father wasn’t covered under his corporate health insurance, he had to bear the entire hospital cost. As a result, he missed his credit card payments. What began as a manageable ₹50,000 debt ballooned to ₹2.5 lakh due to steep interest rates. Eventually, he had to break his father’s fixed deposits to clear the dues. Though his father recovered, the financial damage was done—his CIBIL score was severely hit, and he now fears using credit cards altogether.

What Went Wrong?

1. Delayed Insurance Coverage: He procrastinated adding his father to his corporate health insurance. Corporate insurance helps a lot due to no waiting period, and it's quite difficult to get personal health insurance for senior citizens having pre-existing diseases. Even if you manage to get one, the premium will be pretty high.
2. Inadequate Emergency Fund: While he had some savings, they weren't sufficient for simultaneous emergencies like these
3. Lack of Financial Planning: His spending was impulsive, with little foresight into how overlapping crises could create havoc

The Lesson: Credit cards aren't inherently bad—but they demand discipline, planning, and a safety net. Financial emergencies often come unannounced, and poor preparation can make even small setbacks snowball into lasting damage.

I have seen a lot of people getting ruined due to such bad financial decisions. Hope this post can help some people assess their current financial health and make better decisions.

Thanks,

 

[vijay241]

I agree. Health insurance and emergency fund should be top priority. Also impulsive buying on credit cards should be avoided

 

[SatyG]

I agree. Health insurance and emergency fund should be top priority. Also impulsive buying on credit cards should be avoided

+1. There has been more awareness regarding health insurance of late, especially after COVID. However, people are still not very informed on emergency funds and their usability.

 

[cardio_guycardio_guy is verified member.]

Stay away from credit cards if...​

1. you can't pay the bill in full every month
2. you don't have an income to justify the spends
3. you plan to use it to withdraw money from ATMs
4. you just make random unwanted spends to meet milestones
5. you don't get any value out of it.

esteemed members can add more.

 

[SatyG]

Stay away from credit cards if...​

1. you can't pay the bill in full every month
2. you don't have an income to justify the spends
3. you plan to use it to withdraw money from ATMs
4. you just make random unwanted spends to meet milestones
5. you don't get any value out of it.

esteemed members can add more.

4th point is a red flag. Trying to meet the milestones ultimately helps the banks, not the users.

 

[hender]

> If you don't have health insurance for yourself and your dependents
> if you don't have enough liquid emergency fund
> if you don't have a habit of planning for your finances every month

Here is a recent story of one of my close friends. This friend of mine, employed at a reputed retail brand (H&M India), had a harsh lesson in financial planning shortly after landing his first job. Excited to build his credit, he quickly got into the credit card game and responsibly paid off his dues for the first few months.

However, things took a turn when he faced an unexpected major expense. Confident in his ability to repay, he used his credit card. But soon after, his father fell critically ill. Since his father wasn’t covered under his corporate health insurance, he had to bear the entire hospital cost. As a result, he missed his credit card payments. What began as a manageable ₹50,000 debt ballooned to ₹2.5 lakh due to steep interest rates. Eventually, he had to break his father’s fixed deposits to clear the dues. Though his father recovered, the financial damage was done—his CIBIL score was severely hit, and he now fears using credit cards altogether.

What Went Wrong?

1. Delayed Insurance Coverage: He procrastinated adding his father to his corporate health insurance. Corporate insurance helps a lot due to no waiting period, and it's quite difficult to get personal health insurance for senior citizens having pre-existing diseases. Even if you manage to get one, the premium will be pretty high.
2. Inadequate Emergency Fund: While he had some savings, they weren't sufficient for simultaneous emergencies like these
3. Lack of Financial Planning: His spending was impulsive, with little foresight into how overlapping crises could create havoc

The Lesson: Credit cards aren't inherently bad—but they demand discipline, planning, and a safety net. Financial emergencies often come unannounced, and poor preparation can make even small setbacks snowball into lasting damage.

I have seen a lot of people getting ruined due to such bad financial decisions. Hope this post can help some people assess their current financial health and make better decisions.

Thanks,

Thanks for sharing, sometime GREED took over wisdom.
Look at attached screenshot.

 

[RAMESH BABU N]

CCs/DCs were originally introduced as cash-replacement options. Over the last 3 decades, however, these have become multi-faceted - for reward points, for cashbacks, for showmanship and what not.

Now a days, even unemployed n students (with no income) are having CCs (by dozens) and living out of their future incomes - if any.

Any hiccup in their planning - will be resulting in avoidable financial mess.

 

[hender]

CCs/DCs were originally introduced as cash-replacement options. Over the last 3 decades, however, these have become multi-faceted - for reward points, for cashbacks, for showmanship and what not.

Now a days, even unemployed n students (with no income) are having CCs (by dozens) and living out of their future incomes - if any.

Any hiccup in their planning - will be resulting in avoidable financial mess.

+1,
agree 💯,
Still few are like me, living in stone age.☺️

 

[SatyG]

CCs/DCs were originally introduced as cash-replacement options. Over the last 3 decades, however, these have become multi-faceted - for reward points, for cashbacks, for showmanship and what not.

Now a days, even unemployed n students (with no income) are having CCs (by dozens) and living out of their future incomes - if any.

Any hiccup in their planning - will be resulting in avoidable financial mess.

Agree 100%. Convenience comes with a cost.

I wish we had finance as a subject in our curriculum. I'm fortunate that my father was there to teach me about finance and how behaviour impacts our financial decisions—lessons I didn’t learn through formal education.

 

[RAMESH BABU N]

Agree 100%. Convenience comes with a cost.

I wish we had finance as a subject in our curriculum. I'm fortunate that my father was there to teach me about finance and how behaviour impacts our financial decisions—lessons I didn’t learn through formal education.

In my two previous bank jobs, I have seen many - even colleague/bank employees with life long pension - falter while using CCs. Not because of their lack of knowledge but because of their financial indiscipline. Many opt for EMIs or even being happy by paying only the minimum mentioned in the statements each month. Not reading/not understanding the way in which the penal rates of interest are calculated on the outstanding/future trxns. Despite being staff members, their stupidity in dealing with CC payments have have landed many of them into troubled waters. They had to take gold loans or consumption loans or overdrafts on FDs to clear their ballooning CC outstandings.

 

[KGSIPO]

After 58 years, I took the first credit card mainly to get discount during online purchases . I always had fear in opening accounts with private banks but the young generations are opening wealth accounts in private banks to get some so called rewards

 

[RAMESH BABU N]

It is NOT NECESSARY TO BE QUALIFIED OR CERTIFIED to be financially prudent.

My grandparents NEVER ever took a loan. My parents took only a housing loan. Our generation (I am now 65) got used to credit products.
Now, people are living only on credit.

It has got nothing to do with education. It's attitude and basic financial discipline.

LIVING WITHIN YOUR MEANS.
SAVING FOR A RAINY DAY.
NEVER COMPARING WITH WHAT OTHERS HAVE.

These are based on values. Not on education.

 

[Exewhyzee]

It is NOT NECESSARY TO BE QUALIFIED OR CERTIFIED to be financially prudent.

My grandparents NEVER ever took a loan. My parents took only a housing loan. Our generation (I am now 65) got used to credit products.
Now, people are living only on credit.

It has got nothing to do with education. It's attitude and basic financial discipline.

LIVING WITHIN YOUR MEANS.
SAVING FOR A RAINY DAY.
NEVER COMPARING WITH WHAT OTHERS HAVE.

These are based on values. Not on education.

Well summarised ..

 

[SatyG]

In my two previous bank jobs, I have seen many - even colleague/bank employees with life long pension - falter while using CCs. Not because of their lack of knowledge but because of their financial indiscipline. Many opt for EMIs or even being happy by paying only the minimum mentioned in the statements each month. Not reading/not understanding the way in which the penal rates of interest are calculated on the outstanding/future trxns. Despite being staff members, their stupidity in dealing with CC payments have have landed many of them into troubled waters. They had to take gold loans or consumption loans or overdrafts on FDs to clear their ballooning CC outstandings.

Hope people learn from these mistakes.

Opting for a credit card loan during an emergency need is being glorified by PhonePe in its ad. People with little knowledge might get into these financial traps. I have seen a few people in my circle who are loading their PhonePe wallets using credit cards and then using the money to bet on fantasy apps like MyCircle11 and Dream11.

 

[hender]

It is NOT NECESSARY TO BE QUALIFIED OR CERTIFIED to be financially prudent.

My grandparents NEVER ever took a loan. My parents took only a housing loan. Our generation (I am now 65) got used to credit products.
Now, people are living only on credit.

It has got nothing to do with education. It's attitude and basic financial discipline.

LIVING WITHIN YOUR MEANS.
SAVING FOR A RAINY DAY.
NEVER COMPARING WITH WHAT OTHERS HAVE.

These are based on values. Not on education.

In my two previous bank jobs, I have seen many - even colleague/bank employees with life long pension - falter while using CCs. Not because of their lack of knowledge but because of their financial indiscipline. Many opt for EMIs or even being happy by paying only the minimum mentioned in the statements each month. Not reading/not understanding the way in which the penal rates of interest are calculated on the outstanding/future trxns. Despite being staff members, their stupidity in dealing with CC payments have have landed many of them into troubled waters. They had to take gold loans or consumption loans or overdrafts on FDs to clear their ballooning CC outstandings.

You already said everything. It's about mindset and values.

have seen - few people, by default take loan/borrow as they're getting salary. (Not to payback again.), not looking any TnC , whatever it may be.
Start crying once have to payback.

 

[Trust Me]

Stay away from credit cards if...​

5. you don't get any value out of it.

Depends on one's idea of what constitutes value.

In my view (at the risk of sounding blasphemous in this forum), the rewards or occasional discounts do not constitute any real value to me that I can't live without.

To me, the real value of credit cards comes from how they can provide a source of quick emergency funds (like for sudden medical needs) allowing for a few weeks of additional time to arrange for the funds to pay off the bills. I'd keep my cards for this one reason alone, even if I don't get any other benefits from them (like rewards and such). .... From this perspective, even my Moneyback card deserves its place in my wallet! 🙂
.

 

[hender]

Depends on one's idea of what constitutes value.

In my view (at the risk of sounding blasphemous in this forum), the rewards or occasional discounts do not constitute any real value to me that I can't live without.

To me, the real value of credit cards comes from how they can provide a source of quick emergency funds (like for sudden medical needs) allowing for a few weeks of additional time to arrange for the funds to pay off the bills. I'd keep my cards for this one reason alone, even if I don't get any other benefits from them (like rewards and such). .... From this perspective, even my Moneyback card deserves its place in my wallet! 🙂
.

+1,
I too have MB 😊 @Trust Me

 

[SatyG]

Depends on one's idea of what constitutes value.

In my view (at the risk of sounding blasphemous in this forum), the rewards or occasional discounts do not constitute any real value to me that I can't live without.

To me, the real value of credit cards comes from how they can provide a source of quick emergency funds (like for sudden medical needs) allowing for a few weeks of additional time to arrange for the funds to pay off the bills. I'd keep my cards for this one reason alone, even if I don't get any other benefits from them (like rewards and such). .... From this perspective, even my Moneyback card deserves its place in my wallet! 🙂
.

Well said. Having clear and defined priorities helps a lot

 

[cardio_guycardio_guy is verified member.]

Depends on one's idea of what constitutes value.

In my view (at the risk of sounding blasphemous in this forum), the rewards or occasional discounts do not constitute any real value to me that I can't live without.

To me, the real value of credit cards comes from how they can provide a source of quick emergency funds (like for sudden medical needs) allowing for a few weeks of additional time to arrange for the funds to pay off the bills. I'd keep my cards for this one reason alone, even if I don't get any other benefits from them (like rewards and such). .... From this perspective, even my Moneyback card deserves its place in my wallet! 🙂
.

Exactly the point. That's why I just kept the last point as is. Value depends on each one's perspective. What you told is 💯 right.

 

[vijay241]

If a credit card is not used for impulsive buying or manufacturing spends for rat race of rewards, it is a very potent tool available for us.